Norwest backs Capillary retail solution

"Many offline retailers have no idea who is walking in the door and it is a universal issue, they just don't know," says Mohan Kumar, executive director with Norvest Venture Partners. "In today's world they are fighting with websites who do know, so they end up at a big disadvantage."

Capillary Technologies has been working to redress the balance. The Indian company's success in developing artificial intelligence technology through which retailers can understand customer behavior recently convinced Norwest and Sequoia Capital to provide $14 million in Series B funding.

Set up in Bangalore in 2008, Capillary provides a suite of cloud-based subscription software that allows users to collect and analyze data on their clientele via a point-of-sale customer relationship management (CRM) platform as well as through digital loyalty card schemes and social media campaigns. Boasting users such as Benetton, Nike, Puma and Pizza Hut, the start-ups claims that its software contributes to a 15% increase in average basket value and a 30% increase in customer retention rates.

Kumar stresses that the appeal goes well beyond traditional CRM. "Not only does Capillary put in a system to help retailers understand who their loyal customers are, but it also helps them target those customers more affectively," he says.

Capillary secured its first institutional funding in 2012 when Sequoia and Norwest led a $17 million Series A round. In addition to the Series B, the company raised an additional $4 million in February from American Express Venture. The earlier funding helped build Capillary's global presence. The platform now claims to power more than 150 brands across the US, UK, Middle East, South Africa and Asia Pacific.

"When we invested in the last round the company was primarily India-focused, with 80-90% of its revenue coming from India," explains Kumar. "In the last two years that has fallen to 40%. This expansion and the firm's ability to win new customers is what made us want to do another round."

This round of capital will be used to improve Capillary's cloud-based marketing platform and expand its partnerships, which already include Blue Label Engage in South Africa and the American Express US Global Merchants Services group.

Kumar adds that as the e-commerce sector grows so will the need for brick-and-mortar retailers to keep pace with the data revolution. "There are 2-3 million retailers in Asia and everyone would like to know who is walking in and how to retain them." he says. "With 20,000 stores covered and 100 million consumers, we still have a long way to go."

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• Topics
• South Asia
• Venture
• Technology
• Early-stage
• Venture
• Norwest Venture Partners
• India
• Technology
• Sequoia Capital